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22 February 2024 [19:33] - Today.Az

By News Centre

The Central Bank Monetary Policy Board met for the first time under the leadership of the new president, Fatih Karahan.

After the meeting, the interest rate decision, which the markets were eagerly awaiting, was announced at 14:00.

The Policy Committee announced that it kept the policy rate constant at 45 percent.

The bank increased interest rates by 250 basis points in its last meeting.

The statement made by the Central Bank regarding the interest rate decision is as follows:

The Monetary Policy Committee (Board) decided to keep the one-week repo auction interest rate, which is the policy rate, constant at 45 percent.

The main trend of monthly inflation in January was as a result of time-dependent price and wage updates specific to the first month of the year. Inflation increased as predicted in the forecast path, and headline inflation recorded a limited increase. Recent indicators indicate that the balancing of domestic demand continues. The balancing process in question is strong in consumer goods and gold imports, but slower than expected in other consumption expenditure indicators. In addition, rigidity in service prices, geopolitical risks, and food prices keep inflation pressures alive. The Board will closely monitor the compliance of inflation expectations and pricing behaviour with the forecasts and the effects of wage increases on inflation.

External financing conditions, the level of reserves, the improvement in the current account balance, and the demand for Turkish lira assets continue to contribute to exchange rate stability and the effectiveness of monetary policy. The determined stance in monetary policy will continue to contribute to the real appreciation process of the Turkish lira, which is one of the main elements of disinflation.

The Board evaluated that the current level of the policy rate will be maintained until a significant and permanent decline in the underlying trend of monthly inflation is achieved and inflation expectations converge to the anticipated forecast range. If a significant and permanent deterioration in the inflation outlook is anticipated, the monetary policy stance will be tightened.

The Board will continue to implement macroprudential policies in a way that protects the functionality of the market mechanism and macrofinancial stability. In this context, in the event of developments other than anticipated in loan growth and deposit interest, the monetary transmission mechanism will be supported. In order to support monetary tightness, liquidity developments will be closely monitored, and sterilisation tools will be used effectively.

The Board will determine policy decisions in a way that will provide monetary and financial conditions that will reduce the main trend of inflation and reach the 5 percent target in the medium term, taking into account the lagged effects of monetary tightening.

Indicators regarding inflation and its main trend will be closely monitored, and the Board will resolutely use all the tools at its disposal in line with the main goal of price stability.

The Board will make its decisions in a predictable, data-driven, and transparent framework.

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